"Hotels in the Philadelphia region have not recovered from the recession and are not projected to recover until 2013," said James Gratton, president of the 85-member Greater Philadelphia Hotel Association and general manager of the Courtyard by Marriott Philadelphia Downtown.
While hotel rates are slowly come back, he said, they aren't projected to return to 2007 and 2008 levels for at least another two years.
New business created by the Convention Center expansion still leaves rooms to fill.
"If the average convention lasts four days, and we host 20 citywide conventions a year (those requiring 2,000 or more rooms on peak nights), there are still 285 nights a year . . . the hotels will have to fill," Gratton said. "Currently, we are projecting 16 conventions in [both] 2012 and 2013."
Last year's revenue per available room, or RevPar - the metric used by hotels to measure profitability - was $104, the same as in 2004 and well below 2007's $122.46.
As of May 30, Center City's year-to-date average daily rate (ADR) was $158.21, compared to Boston's ADR of $179.71, and Washington's $215.59.
Several city hoteliers interviewed contend that if the lower ADR persists, it could cut into profits and hinder the ability of newer hotels to finance their mortgages.
"When you think about operating costs such as commodities and labor, they've all gone up while ADR has gone down," said Nick Gregory, director of operations for Kimpton Hotels Philadelphia and general manager of the 230-room Palomar at 117 S. 17th St. "With occupancy flat, you lose the ability to make a profit."
The result, added Gregory, is "ownership groups come down hard on management to lower amenities to keep costs low. If labor is the number-one expense. . . you have to cut labor."
